What are Modern Control Techniques?
In the field of management, control is one of the most crucial aspects and essential tools for achieving the targets. Every management panel has some specific targets, and all the managers wish to reduce the gap between the targets that are set and the performances that are delivered through control. Many strategists and experts of the management domain have introduced several conventional and modern techniques for controlling which help in reducing the losses or risks for their businesses.
The different types of control techniques that are commonly deployed in the management circles are zero-base budgeting, network analysis, management audit, return on investment, and responsibility of accounting. We will take a brief look at these different control techniques.
A Few Such Techniques include:
1. Zero Base Budgeting
Renowned American management expert and business executive Peter Phyrr defined zero-based budgeting in 1970. Zero-based budgeting meaning is a bit different from other budgeting. The manager needs to prepare the budget and justify it from the very beginning of a base zero level. The managers have to carry the extra burden of proving how every facet of budgeting is important on his shoulders.
According to zero budget definition, the managers need to declare objectives of every activity that are going to be supervised by them. Then they can develop alternative plans as to how much they need to spend for comparatively smaller facets of every activity. These plans include the minimum amount to be spent on a project.
When these plans have been chalked out, according to the next phase of zero-based budgeting definition, the managers need to focus on ranking them according to their priorities. But the job is not finished here. These plans need to be evaluated from time to time following their implementation so that any appropriate changes can be made if necessary. This zero-based budgeting process helps in planning as well as creating an effective budget for a project massively.
2. Analysis of Network
A network is a system where a number of plans are interconnected with each other. Thus network analysis is a technique which is used to plan and control complex relationships in a business. There are two types of techniques that are usually adopted by organisations in this regard:
Critical Path: In this technique, the tasks are subdivided into smaller entities by the managers and they look to find the relationship between these entities. Then with the help of flowcharts and mapping techniques, a network diagram is constructed to understand these relations. Getting an idea about these relationships helps a lot as they can now easily understand how a change in an entity will affect the others. This leads to better and effective planning for the future and boosts the performances.
Evaluating the Programme and Review: This technique is usually used by managers to plan and control projects. This technique comprises tasks like schedule planning, creating a budget, forecasting the number of resources required for various projects as well as coming up with alternate plans to boost the performances.
This technique also requires the usage of probability and linear programming to help control management. Probability is required to measure the chances a project will be successful or not while the linear programming method is adopted to maximise the objectives of every individual who is a part of the project.
3. Management Audit
Every organisation needs to sit down at the end of the year and analyse the performances. Management audit is done for this purpose as each managerial function is assessed systematically to review their efficiency. It helps in understanding the shortcomings of the present management system and improve the performances in the future. The audit also helps in updating the existing policies of managers. Thus the coordination among various departments also increases manifold. There is no proper technique of this audit and depends on factors like skills and ethics.
4. Return on Investment
ROI is considered as one of the most useful techniques as it acts as an important measure for evaluating whether the amount of money invested can provide positive returns. Both the performances of the department and organisation can be well understood through ROI.
5. Responsibility accounting
It is a system of accounting where different sections, departments and divisions are set up as responsibility centres for carrying out the various tasks assigned to them. The head of the centre has the responsibility to meet the targets of his centre. These centres are of the following types:
Cost centre
Revenue centre
Investment centre
Profit centre
FAQs on Modern Control Techniques: An Overview
1. What are the advantages of zero-based auditing?
Zero-based auditing refers to the accounting technique which is practised by the managers for thinking about different ways of expenditure in the budgeting period. The benefits of this technique include flexibility of budgets, and the execution is done in a disciplined way. All of the operating expenses are distinctly explained by the manager and this helps in maintaining transparency as well as keeping the legacy expenditure in check.
2. What is meant by controlling?
Controlling is the fundamental managerial function where the activities of an organisation are under the responsibility and control of the manager. It forms the basis for comparison between performances that are delivered and the expected goals or targets that are set up. Controlling is done for bridging the gap between the actual performances and the targets so that the appropriate action can be taken for boosting the productivity of the performances.
3. What are the drawbacks associated with zero-based budgeting?
Zero-based budgeting is hugely significant and is an important part of Modern Control Techniques. It has several benefits but it can also have its own set of drawbacks. Some of the disadvantages of zero-based budgeting are as follows: This technique takes considerable cost, time, and effort which might not be feasible for smaller organisations. Besides this, some of the savvy managers might manipulate the budget for their own good and it might also involve bias towards short term planning.
4. What can I expect from the Vedaantu notes on “Modern Control Techniques”?
The Vedantu notes on ‘Modern Control Techniques' provide a comprehensive description and analysis of the different control techniques that are used in modern organisations. These notes expand on the different types of techniques and give a lucid explanation for each of the techniques. The notes provide highly accurate and high-quality study material for reference to the students which is extremely beneficial for the preparation of the exams.
5. How can I download the Vedantu notes on “Modern Control Techniques”?
Vedantu is a leading online learning platform that provides high-quality learning resources and materials to students of varying branches and domains. If you want to download the Vedantu notes on “Modern Control Techniques” then it can be downloaded for free from either the Vedantu app or the website. These notes are available in PDF format and can be easily downloaded to your device for offline reference.
6. What are the benefits of zero-based budgeting?
Zero-based budgeting means an accounting technique practised by managers to think about how they can spend every single dollar in a budgeting period. The advantages of zero-based budgeting include these budgets are flexible, the execution is carried out in a disciplined manner, all operating expenses are clearly explained by the manager which helps in maintaining transparency and also helps to keep the legacy expenses in check. Thus the importance of zero-based budgeting is immense as the zero-based costing can give a different dimension to the organisation. However, there are a few disadvantages of zero budgeting as often savvy managers manipulate the budget for their good. It takes a lot of time, cost and effort, which may not be possible by small organisations. Also, there seems to be a bias towards planning in the short-term.
7. What is controlling?
Controlling is more like a fundamental managerial function where the activities of any organisation are under the control and responsibility of the manager. It is a basis of comparison between the performances and the expected targets or goals set up initially. The controlling is done to bridge the gap between the targets and the actual performances and take the appropriate actions to boost the performances. Although management is an art, it also has a scientific edge to it. So with advancements in science, management has also kept evolving to come up with some modern techniques besides the more traditional ones.
